Japanese Prime Minister Shinzo Abe has called on Tokyo to build the capital’s third-largest city as part of an ambitious plan to rebuild its economy and address the country’s debt crisis.
Key points:The capital is seen as the best-funded of Japan’s major citiesThe capital has seen a steady decline in foreign investmentThe plan would see about 20,000 new homes built in the capital aloneThe capital, in the heart of the Japanese metropolis of Tokyo, has seen an average decline in capital investment of around 10 per cent per year since 2008.
But the capital has become a symbol of Japan – its economic miracle in the face of global financial crisis and a global recession – and a key factor in a government’s efforts to bring its finances back on track.
Japan has been struggling to raise money to pay for the massive reconstruction and the capital is the third-biggest source of funding in the country, after the public and private sectors.
“We have been very worried about the impact of a collapse in foreign demand,” said Mitsutoshi Hirano, a senior economic adviser at the Japan Infrastructure Development Agency, which is coordinating the plan.
“But there is a lot of demand for housing in the city centre.
That’s why we have to make this effort.”
The plan to build a third-tallest building, at a cost of 3.5 billion yen ($325 million), would be the biggest project undertaken in the world by the government, which has been trying to reduce the countrys massive debt load and the number of people who live in it.
The capital’s economy, the biggest in Asia, has been shrinking rapidly, with annual growth at just 1.5 per cent between 2008 and 2020.
But Abe’s plan is expected to boost growth, boosting the economy’s gross domestic product by 1.4 per cent, as it would make up for a shortfall in investment.
“The Japanese government has been focused on creating jobs and raising incomes, so we are now making this effort,” said Hiroshi Ishihara, the minister in charge of the capital.
“Our goal is to rebuild Tokyo, to create a city that can be the centre of Japanese growth and prosperity.”
Abe is set to announce plans on Tuesday for a major expansion of the subway system, with construction starting in 2021.
The government hopes to spend up to 1 trillion yen ($1.5 trillion) on the project, according to the latest figures from the Tokyo Metropolitan Government.
Abe, who was born in the western city of Osaka, wants to revive the fortunes of Japan by building a massive city that is seen internationally as the country is a major economic force.
The plan, which he hopes to unveil in coming months, will also see construction on a major shopping mall, a luxury hotel, and a new airport.
The prime minister has also ordered a new subway line to be built and said that the government will increase its share of the world’s trade with China by 10 per for every 1,000 residents in 2020.
The central bank also has been making efforts to help Tokyo get back on its feet.
Its policy committee last month raised the country s benchmark overnight interest rate to 4.5% from 4.25%, in an attempt to spur investment.
The rise was seen as a signal that the central bank was easing policy rates and would not raise rates further until after the budget is released in October.
The economy shrank 0.6 per cent in the three months to April, from a year earlier, but it has recovered in recent months.
Abe has been hoping to revive growth by making it easier for people to borrow, which in turn would encourage more investment.
He has also said he will make the government a major contributor to the World Bank, a body that oversees development aid.
The new plan has also been welcomed by some in the Japanese business community.
“This is a huge step forward, and it shows that we are serious about the economy,” said Koichi Takada, a professor of economics at the Graduate School of Business and a former official at the International Monetary Fund.
“A lot of people in Japan are saying that we can’t afford to have this big capital spending program going on, but I think this is the first step towards that.”
Japan has seen the growth of its economy slowly declining over the past two decades.
The country had about 17 million people in employment in 2015, but that has fallen to 13.5 million now, according the latest government figures.
Its GDP fell by about 3.3 per cent last year, to 3.07 trillion yen.
Japan is the biggest economy in Asia and one of the richest in the region, accounting for about 13 per cent of global gross domestic products.
Its exports to China and India have both risen in recent years.
But foreign direct investment into Japan has declined sharply in recent times, to less than 1 per cent a year in 2020 from around 8 per cent now.